Bank of Baroda is entering into a tie-up with Chennai’s fintech startup Creditmantri in order to use alternative data sources for lending decisions. Traditionally, banks have been relying on physical verification of documents and credit bureau data but with alternative sources of data, banks can process applications from first time credit seekers those without a credit score. This will help the banks to lend to SMEs on a realtime basis. Rajit Punja, co-founder, Creditmantri, said an applicant is credit profiled when he applies for a loan with Bank of Baroda. As part of this approach, the borrower’s credit worthiness is assessed across five key pillars which most lenders use to evaluate loan applications using over 1500 credit relevant data points. The data used in the profiling is obtained and used only after applications using over 1500 credit relevant data points. The data used in the profiling is obtained and used only after applicant’s consent, he added. Technology enables the bank to offer low ticket credit products to even first time borrowers and expand into newer segments without the need for related large-scale investments. It can also help the bank reduce credit processing turnaround times by cutting down on need for expensive physical verification processes and expand into new, digitally aware consumer segments where credit bureau data is limited.
